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Harrison Street closes largest-ever European fund

The Chicago-based firm, which is focused on life sciences, student housing and build-to-rent housing, has already deployed 75% of the vehicle.

Harrison Street, a global real estate manager with over $44 billion in assets under management, has raised over €800 million for its third dedicated European fund, Harrison Street European Property Partners III.

A total of 25 limited partners from all three major global regions committed to the fund, with more than 60 percent of the fund’s capital coming from new investors.

PERE’s database lists West Virginia Investment Management Board as having invested €30 million in the fund. The organization is not a new investor, however, having previously committed to Harrison Street European Property Partners II.

The firm’s focus on three niche asset classes – life sciences, student housing and build-to-rent housing – propelled the fundraise to beat its initial €750 million target. In Europe, each of the three sectors has material tailwinds, Paul Bashir, chief executive of Harrison Street Europe, who sits in London, told PERE. He added the maturity of the sectors in Europe is between six and eight years behind the US.

“There are a broad range of factors that are continuing to drive growth and investor appetite in the alternative real assets space,” Bashir said. “Because we invest in fragmented and high barrier to entry markets, our strategies continue to be incredibly attractive to investors seeking to access those markets.”

It is that room for growth that attracted investors to the alternatives-led strategy for the fund, which is already 75 percent deployed. For the BTR space, affordability and a mobile workforce is demanding flexible housing options, Bashir said. Student housing in Europe is buoyed by a large young population and increased demand from overseas students. But life sciences, the property type with a slight overweight in the fund’s investments to date, is displaying the most growth potential, with the firm already the largest owner in the UK in the sector.

“Venture capital investing in life sciences has continued to outpace the growth in real estate availability principally across every country in Europe,” Bashir said. “Life sciences is a very human capital intensive business and as companies take on new investment and look to expand, they need to find new space.”

Harrison Street will both acquire and develop properties through its latest vehicle. The firm is also aiming to expand its market set to take advantage of newer opportunities presenting themselves across the continent. With properties currently in the UK, Ireland and Spain, it is eyeing an expansion into Italy, Portugal, Denmark, France, Germany and the Netherlands, the latter of which has seen acute growth in its life sciences investment.

“As VC capital flows into the European [life sciences] marketplace, we’ll start to see other territories come online,” Bashir said. “It’s those growing markets and sectors which we are primarily focused on.”